My Musings

December 5, 2012

November (and final) update

Well, we finally got there. Ladies and Gentlemen, as of 30 minutes ago I’m very pleased to announcement the Long Straws Bitcoinz Hedge Fund has been wound up, with distributions soon to follow. 

It was around this time last year when I first started thinking about Bitcoins. The concept of a currency without a central governing body intrigued me and the volatility excited me. It didn’t take too long to decide I wanted to have a crack at investing some money here, but my own risk profile wasn’t going to commit any serious cash to a purely speculative play… and that’s where you – my friends – came in. By sharing the risk around I was able to invest a material amount, and through scale I was able to reduce the overall trading fees required if we had invested individually. 

I had a feeling we had an opportunity here, and my contention that Bitcoins could be a lucrative investment has proven correct. 

So, now we’ve wound up, how did we perform in the final month: 

Bitcoin returns for November (click for big)

We started the month towards the low 10’s, but the coins didn’t hang around there for long, shooting up immediately and finishing almost 30% higher – at which point I exited.

(You may note the monthly change in the above table only records a 11% increase for the month, and not the 30% I referenced earlier. The reason for this is I had been reporting all earlier months values in USD. When I sold I had to sell in AUD (obviously, although giving you each an envelope of greenbacks is tempting), thus the decrease.)

At the end of last month I moved a lot of value out of coinz and into cash, providing us some protection just in case everything crashed so close to the end of the investment. Around the first week of November I started to see some positive movements, and coupled with the knowledge that the Bitcoin block reward was about to halve, I made a call to go back ‘risk on’ to see how far we could push our final payout. I’m very happy to announce this was absolutely the right call.

So now let’s get onto what everyone is really interested in: pay day.

Last month I provided you guidance that the final payout per investor would sit around the $400 – $450 mark. Now the fund has exited and I have received all proceeds from sale, I’ve very pleased to announce the final return details: 

The fund has increased from $2,200 to $5,500, representing an individual return of $500 (profit of $300).

$500 was the precise mark I had been aiming for, and had been watching the market obsessively over the past fortnight as we started to flirt with this outcome becoming a possibility. I raised a standing-sell a few days ago, and was very pleased when I woke up this morning to see it had triggered.

This is frankly an outstanding result, representing a 157% return on investment (following fees). To provide some context to this: if you had placed your $200 in the Australian share market, you would now have approximately $220 – a 10% return.

It’s been a lot of fun tracking and trading on this fund, but frankly I’m tired of looking at the Mt Gox price ticker. I’m extremely happy we’ve been able to deliver a great result for everyone and hope you’ll all be able to enjoy your takings over the holiday season. I will be stuffing envelopes over the next couple of days, so when you see me next I should have a nice little Christmas bonus for you!